Today, the battle for customers is won not in the boardroom, but on the store shelves. With an average out-of-stock rate of 7.1%, the industry loses about $4.3 billion a year — and that’s only counting the 9% of shoppers who abandon their purchase entirely if they can’t find their product. Out-of-stock, incorrect price tags or labels, non-compliance with planograms – all these are the consequence of inefficient retail execution, which is now becoming a critical success factor in retail.
In this article, we will look at what retail execution is, what problems managers face when managing sales, and how to address them.
Table of Сontents
What's behind the term Retail Execution
Retail execution refers to management of product representation or penetration in stores, which includes supervision over display standards, monitoring of service quality, and coordination of sales representatives to achieve maximum sales efficiency.
But solid plans often exist on paper only. Eye-pleasing planograms, successful promotional campaigns and carefully considered commodity matrices are rarely implemented correctly.
These problems cause FMCG companies to lose up to a quarter of their potential sales. At the same time, even minor improvements affect profits: an increase in the on-shelf availability by just 3% equals a 1% increase in sales.
Gaining perfect shelf presence
Bad customer experiences are most often associated with fundamental problems in the store: missing items on the shelf, incorrect price tags, and outdated promotional materials, non-compliance with planograms or expired products. So businesses will pay a high price for these mistakes. In the age of social media and the internet, this is becoming even more dangerous – many dissatisfied customers share their experiences online.
Technology rises to the challenge: how companies are already using IT solutions
Compliance of display with planograms and monitoring of promotional materials (POSM)
Product display according to planogram is an essential part of any promotion strategy. Studies show that proper goods presentation can increase sales by 6-8%. Of prime importance is the “golden shelf” – the buyer’s eye level, where sales are on average 35% higher.
But how compliance with planograms can be monitored in hundreds of stores? Use computer vision systems. For example, Goods Checker analyzes photos of shelves taken by merchandisers, automatically recognizes compliance with the planogram and correct POSM location.
For example, after introducing Goods Checker, a merchandising agency from Eastern Europe made the reporting process for merchandisers at the point of sale 70% faster. In addition, the time for a full audit of some stores was reduced by 50%.
The above results were achieved thanks to automatic comparison of the display with the planogram. Now the merchandiser takes a photo of the shelf, Goods Checker instantly analyzes the display and shows what needs to be adjusted. All data automatically goes to analytics database, where managers can view key figures: compliance with the planogram, shelf share and other metrics.
If perfect display is not possible, for example, due to lack of stock in the warehouse, this is recorded in the application. This approach guarantees complete transparency of processes, monitoring of merchandiser performance and obtaining accurate, complete and up-to-date data.
Fighting out-of-stock
The issue of empty shelves is particularly critical for cafes and stores with ready-to-eat food: the lack of goods on display cases leads to an immediate loss of sales. At the same time, employees often do not have time to check if display cases are full due to the need to serve customers.
To address this issue, a Western European video surveillance system integrator offered its clients to use computer vision to monitor the occupancy of display cases. In this project, Goods Checker identifies empty spaces on cafe display cases even with a varying product mix. If empty spaces are detected, the system notifies the staff via a chat bot in a messenger.
Hence, cafe managers got a solution for continuous monitoring of the occupancy of display cases and employee performance. Goods Checker allows determining when products are most often out of stock and in which categories. In the future, this will allow for more accurate planning of employee workload and production volumes by reducing sales losses and the amount of spoiled products.
Price tag monitoring
Prices on the shelf sometimes do not match the prices at the checkout, as employees just do not have time to update all the price tags or shelf labels in the store manually. Electronic Shelf Labels (ESL) are the solution to this problem.
French hypermarket Migros Etrembières has introduced modern electronic shelf labels with automatic updating of prices, promotions and other information important for the buyer. Before the store opens, the system displays data on shelf labels for employees about the remaining stock and the next deliveries of goods. This is particularly important for departments with dynamic product mix – fruits, vegetables and seafood. The solution frees staff from manual handling of shelf labels and allows centralized management of information in the store.
Preventing expired products
A salient issue is control over product expiration dates. Buyers may not come to the store again or file a complaint after purchasing an expired product.
Modern inventory management systems allow for automatic tracking of expiration dates and creating assignments to check goods. Regular monitoring helps reduce write-offs and sales of expired products.
Retail execution of the future: data, monitoring, sales
Improving retail execution requires a systematic approach. Technologies help automate routine processes and reduce human error: smart shelves track the availability of goods, computer vision systems analyze the display, predictive analytics forecasts demand.
Managers obtain accurate data on the situation in stores in real time: non-compliances with display standards, types of missing products, location of incorrect price tags or shelf labels. This allows them to make quick decisions and prevent sales losses.
Owing to automation, companies improve the quality of store operations, reduce operating costs and push up sales.
